After record “all time high” for S&P 500 Index at 3,588.49 on Wednesday 02-Sep-2020, we can observe this weakness in S&P 500 Index after that corresponding week number 36 (from 31-Aug-2020 to 04-Sep-2020).
At the time of writing our blog post on 20th of September 2020, S&P 500 Index is trading at the price level of 3,327.85. This price level of 3,327.85 has closed below the support trend line drawn from the swing low of week number 20 from 11-May-2020 to 15-May-2020 to the swing low of week number 25 from 15-Jun-2020 to 19-Jun-2020. This close for S&P 500 Index can be regarded as its second signal of weakness.
The 1st signal of weakness for S&P 500 Index is its close below the same trend line as mentioned above at the price level of 3,337.15 in the previous week.
It is interesting to note that now S&P 500 Index is closing below its pre Covid-19 high of 3,397.2 for two consecutive weeks and not only this, but also, S&P 500 Index has got stuck between the GAP (pink and green dotted lines in the chart) created by the 2 Covid-19 starting weeks.
Based on these two weaknesses in S&P 500 Index, if price closes below level of 3,311.69 in an weekly basis and its low is taken out then the possible price objectives can be as below:
However, we need to be extremely careful to observe that if this Market is not closes below our level of 3,311.69 in an weekly basis and its low is getting taken out then we will reverse our price targets to the upside which we will post in the coming weeks.
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